H.R. 1 (the “Big Beautiful Bill”) & What It Means for Your Taxed Social Security Benefits

In early July 2025, Congress enacted H.R. 1—often referred to as the One Big Beautiful Bill Act or simply the Big Beautiful Bill (OBBBA). While it spans hundreds of pages and many policy issues, today we’re spotlighting what it means for retirees and clients age 65+.

Myth: "Social Security Isn’t Taxed Anymore"

You’ve likely seen the headlines: “Social Security won’t be taxed under the new bill.” This messaging originated from the Social Security Administration’s announcement that, under the new law, approximately 88 percent of Social Security recipients will owe no federal income tax on their benefits. In context, that’s up from about 64 percent under current law. But what really changed?

There’s no direct repeal of Social Security taxation.

Under existing rules, individuals with provisional income (AGI + tax-exempt interest + 50% of Social Security) under $25,000 (or $32,000 for married filers) owe no tax on benefits. The new law adds a targeted, temporary tax deduction—not elimination—for seniors 65+ with incomes above the $25,000 ($32,000 MFJ) limits, but below a MAGI cap.

So yes, most retirees may pay zero tax on benefits—but that’s because the deduction often exceeds their taxable Social Security amount, not because Congress abolished the tax.

The New Senior Deduction: What You Need to Know

The centerpiece for retired clients:

• Starting with the 2025 tax year (returns filed in 2026), those aged 65 and older may claim an extra deduction of up to $6,000 per taxpayer ($12,000 for married couples filing jointly) if their income qualifies.
• Income caps: The full $6,000 deduction phases out for singles with MAGI above $75,000 (joint filers above $150,000) and disappears entirely beyond higher thresholds (~$175K/$250K).
• If allowed, the deduction is in addition to the regular standard deduction and any age-based deduction currently permitted under law.
• The deduction also applies whether or not the senior itemizes.
• It’s temporary, set to expire after the 2028 tax year, unless extended.

Bottom Line

• Social Security taxes weren’t repealed—rather, most seniors will owe no tax because the new age‑65+ deduction often eclipses the tax on their benefits.
• This temporary, income-limited deduction offers meaningful tax relief for many retirees, but with limits.
• Clients under 65, or seniors above the income thresholds, will not see full relief.

At Fort Vancouver Investment Management, we work closely with our strategic tax partner, Tributa Tax, to ensure that planning decisions translate into real-world tax results. This integrated approach allows us to offer coordinated, forward-looking guidance—from strategy to execution at tax time.

If you’d like personalized tax projections or have questions about how H.R. 1 may impact your retirement plan, get in touch to start the conversation.